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EXCLUSIVE: GOP RESPONDS TO TREASURY DEBT LIMIT REPORT — House Financial Services Committee Chairman Jeb Hensarling (R-Tex.) this morning will release a statement in response to Treasury’s report yesterday on the potentially devastating impact of a debt default. From the statement: “If there is one person who can make sure we do not default on the full faith and credit of the United States it is President Obama. That is why House Republicans passed H.R. 804, the Full Faith and Credit Act, in May. It simply says that the Treasury Department will always pay the principal and interest on its sovereign debt. … Regrettably, the president’s veto threat against this bill only raises the specter of default instead of taking it off the table.

“My hardworking constituents in the 5th District of Texas do not equate payment on a bond issued by the United States government with payment for the next IRS ‘Star Trek’ video … and everything else Washington spends their money on … Washington Democrats are the only ones talking about default because it is the only way they can continue their reckless spending spree. We will never default on our nation’s sovereign debt and House Republicans are the only ones who have acted to ensure our obligations are met.”

TREASURY in its report said “a default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, and U.S. interest rates could skyrocket, potentially resulting in a financial crisis and recession that could echo the events of 2008 or worse.” Full report: http://bit.ly/1a4AblF.

EXCLUSIVE II: PAWLENTY URGES NO DEFAULT— Financial Services Roundtable President and former Minnesota GOP Governor and presidential candidate Tim Pawlenty this morning will send a letter to Congressional leadership of both parties. From the letter: “The Financial Services Roundtable believes it is important for the U.S. government to honor its financial commitments and to strengthen its fiscal house. … It is critical for the U.S. government to not default on its fiscal obligations. The U.S. has been the gold standard for borrowing, and it must continue to be counted on to pay its debts when they come due.

“A default would risk both disarray in those markets and a host of unintended consequences.. It is time for our political leaders to come together to act in the country’s best interests. We believe that our nation's economic future hinges upon the ability to reach an agreement.” Letter: http://bit.ly/GAfc11.

DEPRESSING PARAGRAPH OF THE DAY — From the Institute of International Finance: “Just when the global economy is showing signs of stabilizing, with Europe emerging from recession, and geopolitical risks in the Middle East seem to be subsiding, consumer and investor confidence could be tested by a range of political and policy uncertainties … What is truly unprecedented is a possible, but still unlikely, combination of government shutdown and failure to lift the current $16.7 trillion debt ceiling by October 17. The impact of such a failure of political leadership on business, consumer and investor confidence is difficult to say and could lead to further downgrades of the U.S. sovereign debt. Reflecting rising credit risk, 5-year CDS spreads for the U.S. have risen by 45% in the past 3 weeks to 33 basis points and could test, or exceed, the previous high of 62 basis points reached during the previous threat of default in 2011.”

EMAIL OF THE DAY — From a senior GOP Hill staffer: “We’ve gotten several calls from reporters essentially along the lines of: ‘Why aren’t Republicans listening to Wall Street?’ Without commenting on the merits of raising/not raising the debt ceiling — it’s ironic liberals in Washington finally got what they wanted: members of Congress not ‘beholden’ to Wall Street. And who are they? Tea Party Republicans.”

KILLING UNICORNS — Treasury officials on Thursday pointed to the POLITICO op-ed by former Treasury Chief of Staff Mark A. Patterson as a key part of the administration’s “efforts to tamp down the unicorn theories floating around.” Patterson takes on, and dismisses, the 14th Amendment gambit and the trillion coin approach: “During my years at the Treasury Department, we examined each of these ideas carefully. … Unfortunately, none of the ideas presented to date provide a way around the debt limit.” http://politi.co/158A6xA

OBAMA CANCELS ASIA TRIP — POLITICO’s Jennifer Epstein: “President Obama has cancelled the remaining stops on his Asia trip as the government shutdown continues on, White House press secretary Jay Carney said ... ‘Due to the government shutdown, President Obama’s travel to Indonesia and Brunei has been cancelled,’ Carney said. ‘The president made this decision based on the difficulty in moving forward with foreign travel in the face of a shutdown, and his determination to continue pressing his case that Republicans should immediately allow a vote to reopen the government.’ http://politi.co/15P9hM5

NOT DRIVING TODAY — Due to the shutdown there will be no September employment report. This makes M.M. very sad. Consensus was for a gain of 180K. http://politi.co/1a4E0Hi

THIS MORNING ON POLITICO PRO FINANCE— Jon Prior on the breakdown in talks between Wells Fargo and New York AG Schneiderman over foreclosures [http://politico.pro/16J86Un] … To learn more about Pro's subscriber-only coverage — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 or info@politicopro.com.

GOOD FRIDAY MORNING — Yesterday’s M.M. had the wrong month for the breakfast with CFPB Director Richard Cordray. It’s OCT 17th (obviously not Sept. 17th). M.M. does not possess a Hot Tub Time Machine. He just gets tired sometimes and goofs. http://bit.ly/14HU2Hb. Follow me @morningmoneyben or email me at bwhite@politico.com. Follow @morningmoneypro for alerts as well as other financial news from POLITICO Pro Financial Services, and @POLITICOPro.

DRIVING THE DAY — Normally it would be the jobs report. Today it is not the jobs report. Even though the jobs report would likely have shown some pretty good economic news. Instead it is Shutdown Day 4 and 13 days until the debt limit deadline. Pretty depressing when you stop and think about it.

** Washington seems more preoccupied with partisan posturing than in passing a budget, protecting America's full faith and credit, and dealing with the nation’s significant fiscal challenges. It’s time to Fix the Debt. (http://www.fixthedebt.org) **

COMING NEXT WEEK: DEBT LIMIT HEARING — Per Senate Banking: “On Thursday at 10 A.M. the full Committee will meet for a hearing titled ‘Impact of a Default on Financial Stability and Economic Growth.’ The witness will be Frank Keating, President and CEO, American Bankers Association; Kenneth Bentsen, President, Securities Industry and Financial Markets Association; Gary Thomas, President, National Association of Realtors; and Paul Schott Stevens, President and CEO, Investment Company Institute.”

TECH BLAST: TWITTER FILES FOR $1 BILLION IPO — WSJ’s Yoree Koh, Telis Demos and Shira Ovide: “Twitter Inc. on Thursday revealed plans to raise up to $1 billion in a public offering, looking to cash in on a messaging service that has transformed public conversation but is still losing money … Potential buyers for the first time saw the financials behind one of the most anticipated stock-market debuts of the year, which showed the social network's revenue more than doubled to $254 million in the first six months of this year. But its net loss grew by 40% to $69 million as the company's expenses ballooned.

“Twitter's user growth is also slowing, and prices for advertisements, which make up the bulk of the company's revenue, are falling. … The amount raised in the filing is an estimate that could change when Twitter launches its investor ‘roadshow,’ where it will formally pitch its stock to investors. The document suggests Twitter recently valued itself at about $9.7 billion, based on the number of shares outstanding, or at about $13 billion when including equity awards. Twitter chose TWTR as its ticker symbol but hasn't specified whether it will trade on the New York Stock Exchange … or Nasdaq. http://on.wsj.com/18Wm9lM

INSIDE THE NUMBERS — FT’s Lex column: “Twitter’s numbers are straightforward. It made about $450m in revenue over the past year, more than double the year before. It makes meaty, 64 per cent gross margins and big operating losses because it spends loads of money — over $315m in the past 12 months — on research and on marketing. … The comparison with Facebook … is inevitable. Facebook was roughly Twitter’s size in revenue terms back in 2008-2009. In the four years since, it has increased its revenue twelvefold. If Twitter evolves like that, it could have revenues of $5bn in 2017.

Time to grunt ecstatically and wave branches around. Using the valuation implied by the share count in the filing document and the valuation the company put on itself in its latest insider sale, the offering will value Twitter at around $11bn.” http://on.ft.com/1g9gz4A

FISCAL FLY AROUND —

BOEHNER PLEDGES NOT TO DEFAULT — NYT’s Ashley Parker and Annie Lowrey: “Speaker John A. Boehner has privately told Republican lawmakers anxious about fallout from the government shutdown that he would not allow a potentially more crippling federal default … Mr. Boehner’s comments, recounted by multiple lawmakers, that he would use a combination of Republican and Democratic votes to increase the federal debt limit if necessary appeared aimed at reassuring his colleagues — and nervous financial markets — that he did not intend to let the economic crisis spiral further out of control … Along with Senator Mitch McConnell of Kentucky, the Senate Republican leader, Mr. Boehner has long dismissed the idea that Congress would not act to prevent a damaging default.” http://nyti.ms/15P9M8T

DEBT LIMIT HISTORY — AEI’s Kevin Hassett and Abby McCloskey in the WSJ: “According to the Congressional Research Service, Congress voted 53 times from 1978 to 2013 to change the debt ceiling. The debt ceiling has increased to about $16 trillion from $752 billion. Of these 53 votes, 29 occurred in a Congress run by Democrats, 17 in a split Congress, and seven in a Republican-controlled Congress. …

“Congressional Republicans who want legislative conditions in exchange for a debt-limit increase are following a strategy that has been pursued by both parties the majority of the time. Of the 53 increases in the debt limit, 26 were ‘clean’ … Other times, the limit was paired with reforms, only some of which were related to the budget.” http://on.wsj.com/175XDwL

HOT READ: WEST WING LIFE DURING THE SHUTDOWN — POLITICO’s Carrie Budoff Brown: “Place a call to White House press secretary Jay Carney these days, and it’ll lead to something surprising on the other end: Jay Carney. The White House is a building of gatekeepers … But the White House under the government shutdown, pared down to a fourth of its usual staff size, is a shadow of its hierarchical self. Carney, deprived of his assistant, has to answer all the calls coming into his office. ‘With great care,’ he adds. …

“[T]he shutdown has scrambled the way the West Wing operates, creating annoyances, extra work and lots of open desk space. … On a normal day, more than 1,700 people work for the Executive Office of the President … But since the impasse over government funding forced the first shutdown in 17 years Tuesday, only 440 people are able to report to wor.” http://bit.ly/1g9f4Dp

WHITE HOUSE STANCE CARRIES RISK — WSJ’s Carol E. Lee and Peter Nicholas: “Obama is sticking to his stance that he won't negotiate with Republicans over the government shutdown or the higher-stakes fight over the federal debt ceiling.

The question, for Republicans and White House allies alike: How long will that resolve last? … White House officials believe they have the upper hand, citing evidence that some Republicans are buckling under public pressure. … Said a senior administration official: ‘We are winning ... It doesn't really matter to us’ how long the shutdown lasts ‘because what matters is the end result.’ White House allies, however, say a long shutdown could make the White House's position less tenable.

Mr. Obama is the most visible symbol of the U.S. government, they say, and will inevitably share in the blame as hardships mount and people weary of the infighting … Shaping the White House's hard line are bitter lessons learned from a standoff in 2011 over the debt ceiling, which resulted in a last-minute budget deal. People close to the president said the White House was too flexible in its dealings with Republicans during that episode. ‘Looking back on it, we probably did too much accommodating to them,’ said David Plouffe, a senior White House adviser during the 2011 fight.” http://on.wsj.com/15P9Aqe

“DOWN PAYMENT” RATHER THAN “GRAND BARGAIN”? — NYT’s Jonathan Weisman: “Republican efforts to resolve the fiscal standoff that has closed much of the federal government heated up Thursday … with new talks over a broad budget deal and an effort by more moderate House members to break the logjam. Representative Paul D. Ryan of Wisconsin … has initiated conversations with senior House Republicans on a broad deficit reduction deal that would allow some increases to federal programs squeezed by the automatic cuts known as sequestration in exchange for long-term changes to programs like Medicare and Social Security. The package would most likely include instructions to try to move along efforts to simplify the tax code as well.

“Aides described those talks as ‘conversations about conversations,’ not true negotiations, and they favored the term ‘down payment’ on the deficit over ‘grand bargain.’ But the ‘down payment’ that Mr. Ryan is pursuing must come together fast, to provide a framework that … Boehner … can use to win over enough Republicans to reopen the government and raise the Treasury’s statutory borrowing limit before a government default in two weeks.” http://nyti.ms/1fN5qZv

** Washington seems more preoccupied with partisan posturing than in passing a budget, protecting America's full faith and credit, and dealing with the nation’s significant fiscal challenges. Fights over the short-term continuing resolution and debt limit increase are diverting attention away from the critical issues of entitlement reform, tax reform, and the nation’s unsustainable debt. At nearly $12 trillion, or 72 percent of the economy, the debt is at near record levels, and is on a course to grow dramatically over time. This is simply unacceptable. We must stop jumping from one manufactured crisis to the next. It is time for leaders to be responsible and find a solution to our debt problems now. It’s time to talk. It’s time to act. It’s time to Fix the Debt. (http://www.fixthedebt.org) **